I'd buff the hull and THEN do the stickers.
Personally I don't use terrycloth anymore, just all foam pads. The colors will signify different levels of "cut" or aggressiveness. I usually polish out minor oxidation with orange pads, and then buff with the white pads.
I'd recommend investing in a good RO (random orbit) polisher. This PC unit is pretty much the standard:
http://www.amazon.com/PORTER-CABLE-7...dp/B002654I46/
An orbital polisher will be even more aggressive (and faster), but if you're not familiar with the process you can burn gelcoat and paint pretty easy with a straight orbital unit.
Don't even go near wetsanding if you're just starting out and/or you're not familiar with the thickness of the gelcoat on your boat, too easy to sand through the color...
I use mostly Poorboys products on my cars and boats:
http://www.autogeek.net/poorboysworld.html but there are lots of options, and for a casual user there's not a LOT of difference among them, stick with a name brand and you'll do OK.
The basic stages are Buff, Polish, Wax. It's time consuming at first, but if you get the base in order the ongoing maintenance is easier.
It'll be a while before I unwrap my boat, you're welcome to borrow my Porter Cable RO if you want.